Military Benefits For Former Spouses

Military Benefits for Former Spouses:
Legislation and Policy Issues

Kristy N. Kamarck
Analyst in Military Manpower
January 6, 2017
Congressional Research Service

7-5700
www.crs.gov
RL31663
Military Benefits for Former Spouses: Legislation and Policy Issues
Summary
In 1981, the Supreme Court ruled that the former spouse of a military member or retiree could not
be awarded any share of that members/retirees retired pay as a part of a divorce property
settlement in a community property state. In response, Congress enacted the Uniformed Services
Former Spouses Protection Act (USFSPA) in 1982. Under the USFSPA, state courts can treat
disposable military retired pay as divisible property in divorce cases. However, state laws may
vary on these concepts. The USFSPA makes no assumption of such a division nor does it presume
how much of a division should be made. In addition to possible receipt of retired pay, certain
former spouses would remain eligible to receive certain military benefits or privileges. The
USFSPA has since been modified on a number of occasions.
Confusion exists over the distinction of disposable versus total retired pay. The usage of the term
disposable retired pay may have implications in terms of taxes withheld and taxes paid. In
addition, recent changes in other laws that affect the concurrent receipt of military retired pay and
veteran disability pay may affect the amount of retired pay a former spouse receives.
In other situations, later career and financial decisions made by military retirees may affect the
availability of their retired pay. For example, military retirees who take federal civilian jobs and
then retire from those jobs can waive their military retired pay and credit their military time to
their civilian careers. In so doing, they eliminate their military retired pay, and thereby any share
that might have been awarded to the former spouse.
Since its inception, the USFSPA has remained contentious. Opponents of the law feel that it is
unfair to servicemembers and should be modified or repealed. Proponents argue that the law
protects the former spouse within nationally accepted standards. Some of the most frequently
cited issues include (1) definition of disposable retired pay, (2) effects from new laws concerning
concurrent receipt of military retired pay and veteran disability compensation, (3) interactions
with other federal retirement systems, (4) effects in cases of early separation of service members,
(5) and treatment of benefits upon remarriage of a former spouse. As with the original provisions
of the USFSPA, these and other proposed changes have been the source of great debate.
Although legislation making various changes to the USFSPA has been introduced in the past,
none of this legislation has allowed for retroactive change to settled cases.
Contents
Purpose ............................................................................................................................................ 1
The Uniformed Services Former Spouses Protection Act (USFSPA) ............................................. 1
What Does the USFSPA Authorize? ......................................................................................... 2
Survivor Benefit Plan: Benefits for Divorced Spouses ............................................................. 4
Other Benefits for Former Spouses of Retired Members .......................................................... 5
Reopening Court Cases ............................................................................................................. 6
Implementation of the Existing Law and Related Measures ........................................................... 7
Disposable Retired Pay ............................................................................................................. 7
Life Insurance Premiums and Disposable Pay .................................................................... 7
Tax Liability and Disposable Pay ....................................................................................... 8
Concurrent Receipt of Retired Pay and Disability Compensation .......................................... 10
Dual Compensation: Retired Pay and Civil Service Pay ........................................................ 12
Interactions with Other Federal Retirement Systems .............................................................. 13
Federal Civil Service Retirement and Waiver of Military Retired Pay ............................. 14
Persons Affected by Catch 62........................................................................................ 15
Early Separations .................................................................................................................... 15
Other Issues for Congress.............................................................................................................. 15
Military Retired Pay and Civilian Pensions ............................................................................ 16
Recent Changes to the Military Retirement System ............................................................... 16
Pay Grade at Retirement v. Pay Grade at Divorce .................................................................. 18
Remarriage of a Former Spouse .............................................................................................. 18
Working Spouses and Dual-Service Couples .......................................................................... 19
Tables
Table 1. Example Disposable Retired Pay With and Without Life Insurance Deductions .............. 8
Table 2. Example Income Tax Implications: Division of Disposable Retired PayRetiree
Single............................................................................................................................................ 9
Table 3. Example Income Tax Implications: Division of Retired PayRetiree Remarries,
Now Has a Spouse and Two Dependents ................................................................................... 10
Contacts
Author Contact Information .......................................................................................................... 20
Purpose
This report provides a general discussion of legislative provisions and proposals relating to the
military benefits for former spouses. It is not designed to answer detailed questions about specific
issues arising in individual cases. Thus, it does not deal with case law nor does it apply legal or
judicial interpretations of enacted statutes to specific situations.
Questions that this report seeks to answer include the following:
What benefits can former spouses of members or retirees of the uniformed

services receive under law?
What role do the services play in facilitating delivery of those benefits? What
practical problems arise in the implementation of and service involvement in
claims on those benefits?
How does the current system for a divorce-related division of military retired pay
work?
These frequently asked questions reflect confusion and controversy over social policy and
economic equity issues. The administrative and legal implementation has proven complex, due to
the large number of couples affected and the variety of circumstances surrounding their military
service and divorce.
The Uniformed Services Former Spouses Protection

Act (USFSPA)
Prior to 1981, state courts disagreed as to whether they were authorized or constrained by federal
legislation or federal legal precedent in dividing military retired pay in divorce-related property
settlements. Inconsistencies among the states and perceptions of unfairness and arbitrariness were
common grounds for criticism of the system.
The Supreme Court ruled (6-3) on June 26, 1981, in the case of McCarty v. McCarty,1 that the
former spouse of a military member or retiree could not be awarded any share of that
members/retirees retirement pay as a part of a divorce property settlement in a community
property state2, because then-current federal law did not authorize the treatment of military retired
pay as divisible property in such a settlement.3 In reaching this ruling, however, the court did not
necessarily endorse its social impact. Indeed, Justice Blackmun (writing for the majority),
virtually invited Congress to consider a change in the law to allow such a division to be made:
We recognize that the plight of an ex-spouse of a retired member is often a serious one.
See Hearing on H.R. 2187, H.R. 3677, and H.R. 6270 before the Military Compensation
Subcommittee of the House Committee on Armed Services, 96 th Cong., 2d Sess. (1980).
That plight may be mitigated to some extent by the ex-spouses right to claim Social
Security benefits, cf. Hisquierdo, 439 U.S. at 590, and to garnish retired pay for the
purposes of support. Nonetheless, Congress may well decide, as it has in the Civil
1
453 U.S. 210 (1981).

The McCarty case was initiated in California, one of eight community property states at the time. Other community
property states included Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington.
3
Generally, a community property state is defined as one in which all property earned by either the husband or the wife
during the course of the marriage is treated as jointly held property for the purposes of a settlement.
2
Service and Foreign Service contexts, that more protection should be afforded a former
spouse of a retired servicemember. The decision, however, is for Congress alone. We
very recently have reemphasized that in no area has the Court accorded Congress greater
deference than in the conduct and control of military affairs. 4
Congress responded by enacting the Uniformed Services Former Spouses Protection Act in
September 1982.
What Does the USFSPA Authorize?

The USFSPA has five important provisions.
1. It enables state courts to treat disposable military retired pay as divisible property
in divorce cases.5
2. It allows direct payments by the uniformed services (Army, Navy, Marine Corps,
Air Force, and Coast Guard) of up to 50% of a members or former members
disposable retired pay to the former spouse if the settlement involved is in
compliance with the USFSPA.
3. It allows for the enforcement of alimony and child support (in conjunction with
previously enacted provisions of law providing for such enforcement regarding
military personnel in 42 U.S.C. 659).
4. It allows a military member or retired member to voluntarily designate a former
spouse as a beneficiary under the military Survivor Benefit Plan. This provision
was later modified by Congress to allow state courts, under certain conditions, to
order a member or retiree to provide military Survivor Benefit Plan benefits to a
former spouse.6
5. It defines which former spouses are eligible to secure access to militarysponsored medical care benefits (e.g., care at uniformed service facilities), as
well as commissary and exchange privileges.7
The USFSPA currently allows state courts to consider disposable military retired pay (excluding
disability retired pay) as divisible property in a divorce settlement, and establishes procedures
whereby a former spouse can receive direct payment of a part of that retired pay directly from the
Defense Finance and Accounting Service (DFAS).8 There has been some confusion about the
distinction between USFSPA provisions that authorize courts to divide retired pay, and provisions
that allow for the direct payment of divided retired pay. Under the USFSPA, state courts are free
4
453 U.S. 210 (1981).

Disposable retired pay is retired pay less withholdings, disability pay the member is entitled to on the date the
member retires or was placed on the temporary disability retirement list, and Survivor Benefit Plan deductions. For
divorces occurring after November 5, 1990, disposable retired pay is total monthly retired pay less amounts owed to
the United States for previous overpayments and other recoupments required by law, amounts deducted as a result of
forfeitures of retired pay ordered by a court-martial, and amounts waived in order to receive compensation under title 5
U.S. Code (civil service) or title 38 U.S. Code (veterans benefits).
6
For more information on the military Survivor Benefit Plan, see CRS Report RL31664, The Military Survivor Benefit
Plan: A Description of Its Provisions, by David F. Burrelli.
7
For more information on the Military Health Services System, see CRS Report RL33537, Military Medical Care:
Questions and Answers, by Don J. Jansen.
8
When enacted, each service (Army, Navy, including the Marine Corps, and Air Force) had their own pay services.
Since then, DODs pay operations have been consolidated under the Defense Finance and Accounting Service (DFAS).
DFAS Cleveland handles matters related to retired pay, to include USFSPA.
5
to order the division of disposable retired pay in any manner congruent with state law. The
USFSPA does not direct state courts to divide retired pay or to award a former spouse a certain
percentage of disposable retired pay. Whether such a division is made, and if made, what
percentage is awarded to the former spouse is left to the discretion of the court in each individual
settlement.
The secretary of the particular military department (Army, Navyincluding the Marine Corps,
and Air Force, and the Secretary of Homeland Security for the Coast Guard) can make direct
payments of a portion of that pay to a former spouse. These payments are managed by the
Defense Finance and Accounting Service (DFAS).9 In order to be eligible for direct payment, a
former spouse must have been married to the servicemember or retiree at least 10 years, during
which the servicemember or retiree must have served at least 10 years of creditable military
service. In addition, the awarded division of military retired pay must be incorporated in a court
ordered, ratified or approved divorce-related settlement. These provisions of the USFSPA pertain
only to property settlements and do not affect provisions for alimony or child support. The
USFSPA does not relieve the servicemember or retiree from the obligation to pay court-ordered
alimony and/or child support payments (which are distinct from a divorce property settlement)
whether or not the retired pay is divided.
The service secretary concerned is required to begin payments to the former spouse within 90
days after the receipt of a valid court order. If the member has not yet retired from the armed
forces at the time of the court order, the service secretary must begin payments not later than 90
days after the member becomes entitled (i.e., retires). The USFSPA does not authorize any court
to order a member to apply for retirement or retire at a particular time in order to effectuate any
payment.10
What is the 10/10 rule?
When discussing military divorce settlements some people refer to the 10/10 rule. The 10/10 rule only affects how
the former spouse receives the divided retired pay. Direct payments are made by the Defense Finance Accounting
Service (DFAS) to former spouses who are eligible under the 10/10 rule. In order to be eligible for direct payment of
retired pay from the Defense Finance Accounting Service (DFAS), a former spouse must have been married to the
servicemember or retiree at least 10 years, during which the servicemember or retiree must have served at least 10
years of creditable military service. Eligibility to receive direct pay under this rule is not automatic; the award of
military retired pay still must be incorporated in a court ordered, ratified or approved divorce-related settlement.
Former spouses who do not meet the 10/10 criteria may still be awarded a portion of the servicemember or retirees
retired pay by the court. However, in this case, the retired servicemember receives his/her entire retired pay from
DFAS and he/she arranges for the court ordered amount to be distributed to his/her former spouse.
Under the USFSPA, the amount of court ordered retired pay that the services can pay to a former
spouse under the direct payment provisions is limited to 50% of disposable retired pay or up to
65% if other provisions for garnishment such as alimony or child support (under 42 U.S.C. 659)
exist. When the servicemember has more than one former spouse, payment orders are handled by
the secretary on a first-come, first-serve basis. The combined amount of retired pay paid out to
one or more ex-spouses through the direct payment mechanism cannot exceed 65% of disposable
retired pay, but this does not relieve the member or retiree of an obligation to pay any additional
sums which are awarded to a former spouse.
9
For more information on how DFAS handles pay to former spouses under USFSPA, see http://www.dfas.mil/
garnishment/usfspa/legal.html
10
10 U.S.C. 1408(c)(3).
When conflicting orders exist (e.g., retired pay subject to more than one court order), the USFSPA
instructs the secretary concerned to send the amount specified in the lesser of the two conflicting
orders to the former spouse(s), retain the difference between the two (up to 50%), and send the
balance to the retiree. Upon resolution of the conflicting order, the secretary is to allocate the
retained amount in accordance with the USFSPA.
Finally, the USFSPA does not allow a court to consider military retired pay in a divorce-related
property settlement unless the court has jurisdiction over the servicemember or retiree by reason
of his/her
residence other than military assignment in the territorial jurisdiction,

domicile in the territorial jurisdiction of the court, or
consent to the jurisdiction of the court.
Survivor Benefit Plan: Benefits for Divorced Spouses

In addition to providing for the division and direct payment of military retired pay, the USFSPA
allows divorced spouses of military members or retirees to draw benefits from the DOD Survivor
Benefit Plan (SBP) under certain circumstances. The SBP, established by P.L. 92-425, September
21, 1972, provides financial protection for the surviving dependents of deceased military
members and retirees.11 All personnel of the uniformed services who retire on or after September
21, 1972, are automatically enrolled in the SBP unless they elect not to participate. In 2001,
Congress extended SBP coverage to personnel who die while serving on active duty. Such
coverage was extended to the survivors of those individuals who die while on active duty, on or
after September 10, 2001.12 Changes concerning the SBP coverage can be made after the initial
agreement only if both parties to the divorce agree to it. Any elections other than the maximum
protection for a spouse made after March 1, 1986, can take place only if the spouse concurs.13
Under the plan, retired pay is reduced to provide for the cost of a survivor benefit. The USFSPA
provides that members or retirees may voluntarily elect to name a former spouse as beneficiary
for divorces occurring before November 14, 1986. This election may be part of, or incident to, a
divorce-related property settlement. If a divorce occurred on or after November 14, 1986,
however, a court may order a member or retiree to provide SBP protection as part of or incident to
a divorce. According to changes in law implemented by the FY1987 National Defense
Authorization Act, A court order may require a person to elect (or to enter into an agreement to
elect) ... to provide an annuity to a former spouse (or to both a former spouse and child).14 This
language does not require courts to make such an order, but gives them the freedom to do so.
The National Defense Authorization Act for Fiscal Year 2016 amended the Survivor Benefit Plan
(SBP) statute to provide a member who had made an election to provide SBP or Reserve
Component SBP (RCSBP) coverage for a former spouse the ability to cover a subsequent spouse
if the former spouse dies. The legislation includes an open season period to accommodate
members whose covered former spouse beneficiaries were already deceased when the legislation
was enacted.
11
Upon the death of a military member/retiree, income from the military ceases.
P.L. 107-107.
13
U.S., Congress, Senate, Conference Committee, FY1986 Department of Defense Authorization Act. S.Rept. 99-118,
S. 1160, 99th Cong., 1st Sess., July 29, 1985: 98.
14
10 U.S.C. 1450(f)(4).
12
Other Benefits for Former Spouses of Retired Members

The USFSPA and subsequent amendments also authorized military medical benefits and
exchange and commissary privileges for certain un-remarried former spouses of military
members or retirees.15 Eligibility for these benefits depends on both the years of marriage and
service by the member or former member and, in certain instances, the date of the final decree of
divorce, dissolution, or annulment. Each set of requirements for eligibility is treated separately
here.
When originally enacted in 1982, the USFSPA provided that, if a member had been married for at
least 20 years to one spouse, during which time the member performed at least 20 years of
creditable military service, the un-remarried former spouse was eligible for military commissary
and exchange privileges, as well as military medical benefits, if he or she did not have medical
coverage under an employer-sponsored health program. This restriction (known popularly as the
20/20/20 restriction) was considered unfair by some because it excluded many former spouses
who met most, but not all, of the time requirements. In some cases, for example, the marriage
could have lasted 20 years, the servicemember had served 20 years, but the two did not overlap
by the required 20 years.
Legislation enacted in 1984 (as subsequently modified) established benefit eligibility provisions
for former spouses who do not meet the 20/20/20 restriction (the benefits of those who do meet
the 20/20/20 restriction were not affected by these provisions).16
First, it provided full eligibility for medical care for former spouses whose final decree of
divorce, annulment, etc., was dated before April 1, 1985 and who meet the eligibility
requirements, except for the fact that their minimum of 20 years of marriage and 20 years of
creditable service overlapped by only 15 years or more, and by less than 20 years (i.e., they meet
a 20/20/15 restriction).
Second, it provided a transitional medical care program for former spouses who met the
eligibility requirements and the 20/20/15 restriction, but whose final decree of divorce was April
1, 1985, or later. They would be eligible for transitional care in the military medical care system
for two years, followed by the right to convert to a private health insurance plan with the identical
restriction on remarriage and other medical coverage.17 Legislation enacted in 1988 limited the
period of transitional medical care to one year.18
Third, the 1984 legislation provided that former spouses who were otherwise eligible, but who
did not meet the minimum 20/20/15 restriction would be eligible for coverage under a specifically
formulated private health care plan, with responsibility for premium payments for this plan to be
determined by the court in the divorce property settlement.19
15
See 10 U.S.C. 1062 and 10 U.S.C. 1072(2)(F and G).

P.L. 98-525, Section 645(a), September 27, 1984.
17
See 10 USC 1086a.
18
See P.L. 100-456, Section 651; P.L. 101-189, Section 731.
19
See 10 USC 1078a.
16
Reopening Court Cases

The legislative history of the USFSPA indicates that it was the intent of Congress that the direct
payment provision of the USFSPA became effective on June 26, 1981, and would not be applied
to cases finalized before that date. It was noted in the conference report on the act that
Although the Conference Report contains no prohibition against courts reopening
decisions before [June 26, 1981], the conferees agreed that changes to court orders
finalized before the McCarty decision should not be recognized if those changes were
effected after the McCarty decision (and before the effective date of the new title X) to
implement the holding in that decision (for example, a modification setting aside a preMcCarty division of military retired pay).20
Thus, if a divorce were settled two weeks before the McCarty decision and the member retired
after McCarty, divisibility of retired pay (and other provisions) would, arguably, not apply unless
the original decree allowed for a division of retired pay. However, the applicability of the
USFSPA, in general, to reopened cases, remained ambiguous.
Congress has no direct control or jurisdiction over state courts, which handle almost all domestic
relations law (separation, divorce, adoption, etc.). However, Congress does have control over the
administration and disbursal of federal compensation and benefits related to domestic relations
law. Congress has indicated its intention that federal law governs the treatment of these benefits
in divorce-related settlements.
The U.S. Comptroller General has ruled that certain former spouses, who have their pre-McCarty
divorces reopened on or after June 26, 1981, may be ineligible to receive direct payment from the
military services.21 Nevertheless, despite congressional language to the contrary, some states
continued the practice of reopening pre-McCarty divorces in order to allow for a division of
retired pay. The National Defense Authorization Act for Fiscal Year 1991 placed explicit limits on
the ability of state courts to consider retired pay as property in the reopening of a pre-McCarty
divorce which did not provide for such a division.22 In its report on this legislation, the House
Armed Service Committee stated:
The committee is concerned because some state courts have been less faithful in their
adherence to the spirit of the law. The reopening of divorce cases finalized before the
Supreme Courts decision in (McCarty v. McCarty) that did not divide retired pay
continues to be a significant problem. Years after final divorce decrees have been issued,
some state courts, particularly those in California, have reopened cases (through partition
actions or otherwise) to award a share of retired pay. Although Congress has twice stated
in report language that this result was not intended, the practice continues unabated. Such
action is inconsistent with the notion that a final decree of divorce represents a final
disposition of the marital estate.
Section 555 would provide that a court may not treat retired or retainer pay as property in
any proceeding to divide or partition such pay of a member as the property of the member
20
U.S., Congress, House, Conference Committee, Department of Defense Authorization Act for Fiscal Year 1983,
H.Rept. 97-749, August 16, 1982: 167-168.
21
In a case before the Comptroller General, a pre-June 26, 1981 divorce settlement did not divide military retired pay;
the settlement was modified after June 26, 1981 to include a division of military retired pay. The efforts of the former
spouse to receive direct payment were rejected by the Army. The Comptroller upheld the Armys decision to reject the
request for direct payment because (1) the original decree denied a division of retire pay and (2) the original decree
occurred before June 26, 1981. Matter of: Phyllis M. Tharp B-229440 68 Comp. Gen. 116 (1988). Direct Payment of
Retired Pay to Divorcees Limited, Army Times, January 16, 1989: 16.
22
P.L. 101-510, 104 Stat. 1485, November 5, 1990, codified at 10 USC Section 1408(c)(1).
and his spouse if a final decree of divorce, dissolution, annulment or legal separation
(including court ordered, ratified, or approved property settlement incident to such a
decree) was issued before the McCarty decision and did not treat retired pay as property
of the member and the members spouse or former spouse. This provision would apply to
judgments issued before, on, or after the date of enactment [November 5, 1990] of this
Act, but only with respect to any requirement to make payments pursuant to such
judgments after the date of enactment. Thus, individuals divorced before the McCarty
decision who have their cases reopened would not be relieved of the obligation to make
payments until after the effective date of this Act. 23
Implementation of the Existing Law and

Related Measures
Implementation of the provisions of the USFSPA has often been confusing and frustrating for
those involved. Uneven implementation of the law, especially with respect to the direct pay
provisions, and the changing definition of disposable pay as the basis for division of retired pay
have been contributing factors. In addition, changes to other laws affecting the treatment of
military retired pay with respect to other forms of compensation have also complicated the
implementation USFSPA.
In 1984, the U.S. General Accounting Office (GAO, now called the Government Accountability
Office) published a report that examined the implementation of the USFSPA.24 The GAO also
noted that many of the early implementation problems were related to inconsistent language used
in court-ordered settlements. Over the years, changes to the law and actions by the courts have
overcome many of these problems.
Disposable Retired Pay

A fundamental problem GAO identified in the initial USFSPA was the provision for the division
of disposable retired pay.25 GAO noted that this provision may be producing results not initially
contemplated by the Congress.26 IRS withholding provisions, GAO pointed out, can work to the
advantage of the member or former spouse. Moreover, changes in the tax liability of the member
can influence benefits to the former spouse in ways that the court order would not have
anticipated.27
Life Insurance Premiums and Disposable Pay

The National Defense Authorization Act for Fiscal Year 1987 modified the definition of
disposable retired pay to eliminate life insurance deductions.28 Retired pay that was used to pay
life insurance premiums was thereafter considered disposable pay and, thus, subject to division.
23
U.S. Congress, House, Committee on Armed Services, National Defense Authorization Act for Fiscal Year 1991,
H.Rept. 101-665, H.R. 4739, August 3, 1990: 279; P.L. 101-510, 104 Stat. 1569, November 5, 1990.
24
U.S. General Accounting Office, Implementation of the Uniformed Services Former Spouses Protection Act,
October 24, 1984, GAO, NSIAD-85-4, B-214076.
25
The definition of disposable retired pay was modified, effective February 4, 1991, to eliminate many of the problems
created by excluding tax withholdings from the definition.
26
GAO (1984), p. 19.
27
GAO (1984), p. 20.
28
P.L. 99-661.
This may have the effect of reducing the amount available to the retiree while increasing pay to
the former spouse. For example under the new definition of disposable pay, assume that a
hypothetical retiree receives $1,000 per month in military retired pay, has $200 withheld in taxes,
pays $50 in life insurance premiums which benefit the former spouse, and has one-half of
disposable retired pay. A demonstrated in column two of Table 1, when life insurance deductions
are not included in disposable pay the retiree receives a net of $350 (or $25 less) and the former
spouse receives $400 (or $25 more). Therefore, the beneficiary of the life insurance policy will
continue to benefit, while the entire cost of the policy is borne by the retiree.
Table 1. Example Disposable Retired Pay With and Without
Life Insurance Deductions
With Life Insurance Deductions
$1,000 total monthly retired pay
-$200 in tax witholdings
-$50 in life insurance premiums
_______________________
$750 in disposable income
(Each receives $375)

Without Life Insurance Deductions
$1,000 total monthly retired pay
-$200 in tax witholdings
___________________
$800 in disposable income
(Each receives $400, however, retiree has net of $350
after paying $50 life insurance premium)
Note: This example is for explanatory purposes only.
Conversely, the former exclusion of life insurance premiums in the definition of disposable
retired pay may have benefitted the retiree. When insurance premiums were excluded, a postdivorce retiree could legally reduce the amount a former spouse received. In this hypothetical
situation, a retiree could take out an insurance policy naming a second spouse, dependents, or
him/herself as beneficiary.29 Retired pay could then be directed to insurance premiums and,
thereby, reduce the amount of retired pay available to a former spouse.
Tax Liability and Disposable Pay

The National Defense Authorization Act for Fiscal Year 1991 further modified the definition of
disposable retired pay. Specifically, amounts owed to the federal government for previous
overpayments of retired pay and for recoupments required by law resulting from entitlement to
retired pay are excluded from this definition.30 In addition, amounts withheld from federal, state
or local taxes may not be excluded. In other words, pre-tax withholding retired pay is considered
disposable and subject to division effective February 4, 1991.
It is important to remember that taxes withheld are not necessarily the same amount as taxes
owed (i.e., tax liability). Final tax liability is determined when tax forms are filed with the IRS.
The amount determined to be payable at the time of filing may be substantially different from the
sum of withholdings from each check. Because disposable retired pay may be determined and
divided on the basis of the amount paid in each military retirement check less withholdings and
not on actual tax liability (for those pre-February 4, 1991, settlements), the amount received by
the former spouse may vary from the amount receivable if retired pay were divided based on
actual tax liability.
29
30
By naming himself/herself as beneficiary, the retiree could use the insurance policy as a savings account.
P.L. 101-510; 104 Stat. 1569; November 5, 1990.
For example, consider a case in which a service divides the disposable part of retired pay of
$24,000 equally between the servicemember and the former spouse as directed in a hypothetical
court order on the assumption that each will benefit equally (see Table 2). For simplicity, assume
that each is single, under age 65, does not itemize deductions, and has no other source of income.
In this situation, the government will withhold from the retiree approximately $3,400 in federal
income taxescalculated on the basis of $24,000 of income. The remaining disposable pay of
$20,600 will be divided between the ex-spouse and the retiree with each receiving $10,300. The
military retiree is liable for tax of about $1,319 on $13,700 (gross retired pay less the former
spouses share) and so receives a refund of about $2,081 ($3,400-$1,319). The former spouse,
however, must still pay taxes of about $809 on the amount of retired pay received. Thus, the
military retiree receives $12,381 (56.6% of total) in after tax income while the former spouse
receives $9,491(43.4% of total).31
In addition, the payments to the former spouse depend on the tax status of the retired
servicemember. A former spouse whose circumstances are identical to those in the hypothetical
case above, but whose (retired servicemember) ex-spouse has remarried and now has three
dependents, receives $659 more after taxes than does the ex-spouse in the first example (see
Table 2 and Table 3).
This occurs because the former members additional dependents allow him or her to reduce tax
withholding which, in turn, increases disposable retired pay, and thus, the former spouses share.
Table 2. Example Income Tax Implications:
Division of Disposable Retired PayRetiree Single
Military Retiree
Former Spouse
Total retired pay
$24,000
Federal tax withholding
$3,400
Disposable retired pay remaining
$20,600
50% division
$10,300
$10,300
Tax liability
-$1,319
-$809
Retirees tax refund (withholding less tax liability)
+$2,081
After tax income
$12,381
$9,491
56.6%
43.4%
Actual percentage division of total after-tax retired pay of $20,600
Notes: Figures are approximations. This example applies only in cases where a strict property distribution
occurs. Other factors included in a divorce settlement could affect the final outcome in ways that could not be
anticipated without knowing the specific issues involved. Therefore, both Tables 1 and 2 are intended for
explanatory purposes only.
31
GAO, in similar calculations, but assuming the retired member had a dependent, estimated a 58.4% - 41.6% split
(GAO, pp. 24-25).
Table 3. Example Income Tax Implications:

Division of Retired PayRetiree Remarries, Now Has a Spouse and Two Dependents
Military Retiree
Former Spouse
Total retired pay
$24,000
Federal tax withholding
$1,856
Disposable retired pay remaining
$22,144
50% division
$11,072
$11,072
Tax liability
-$318
-$922
Retirees tax refund (withholding less tax liability)
+$1,538
After tax income
$12,610
$10,150
55.4%
44.6%
Actual percentage division of total after-tax retired pay of $20,600
Notes: Figures are approximations. This example applies only in cases where a strict property distribution
occurs. Other factors included in a divorce settlement could affect the final outcome in ways that could not be
anticipated without knowing the specific issues involved. Therefore, both Tables 1, 2 and 3 are intended for
explanatory purposes only.
As the above examples suggest, the ex-member could, if he or she chooses, reduce the benefits to
the former spouse by increasing tax withholding on the retired pay to the highest permissible
levels and realizing unshared reimbursement in the tax refund. In an effort to curb abuse of this
practice, the Comptroller General issued a ruling that retirees with outside incomes would still be
able to increase withholding on their retired pay, but only up to a percentage justified by their
projected effective tax rate. That rate would be based on the ratio of the retirees anticipated total
income tax to anticipated total gross income from all sources.32
Concurrent Receipt of Retired Pay and Disability Compensation

In recent years, Congress has addressed an issue concerning the payment of military retired pay to
retirees who qualify for disability compensation from the Department of Veterans Affairs (VA).
Disability payments are excluded from the definition of disposable retired pay. Provisions
restricting dual compensation have been in effect since 1891, when Congress enacted language
prohibiting the concurrent receipt of a disability pension in addition to pay for past or current
service.33 As modified in 1941, the law prevented the concurrent receipt of both military
nondisability retired pay and veterans disability compensation. For those eligible for both,
military retired pay was offset or reduced, dollar for dollar, by VA disability benefits. For
example, if a retired servicemember was eligible for $1,000 per month in retired pay and $400 in
VA disability benefits, the servicemember would receive $1000 in retired pay plus $400 in
disability, minus a $400 reduction in retired pay, for a total of $1,000 before taxes. While retired
pay is taxable, VA disability benefits are tax free, so the retiree would only be taxed on the $600
of retired pay.
For the purposes of USFSPA, the definition of disposable retired pay excludes VA disability
benefits.34 Prior to 2004, a retiree eligible for disability compensation could choose to waive
32
Comptroller General of the U.S., ruling B-213895, April 25, 1984.

See CRS Report R40589, Concurrent Receipt: Background and Issues for Congress, by Kristy N. Kamarck
34
A disabled individual is considered qualitatively in a different category than his/her able-bodied peers (including
his/her former spouse). This is based on the assumption that such an individual does not have the same opportunities to
(continued...)
33
10
retired pay in the amount of the disability benefit and, thereby, reduce or eliminate the amount of
retired pay available for division in a property settlement.
The FY1987 National Defense Authorization Act stated that the disability exclusion would be
eliminated to the extent that it excludes retired pay that is only nominally related to disability. A
person eligible for military retired pay for length of service who had a disability rated as 10% at
the time of retirement is eligible for disability retirement.35 This means that the retiree may have
had the amount of his/her retired pay computed based on his/her years of service but paid as
disability retired pay. This modification would exclude from disposable retired pay only so much
of the retired pay received under Chapter 61 as would actually relate to the extent of the
disability.36 In other words, the above retiree who had a disability rated at 10 % has only a portion
of retired pay defined as disposable retired pay.37
The FY2003 and FY2004 NDAAs introduced two forms of concurrent receipt that allowed
eligible servicemembers to receive both retired pay and certain disability compensation. These
programs are known as Combat-Related Special Compensation (CRSC) and Concurrent
Retirement and Disability Program (CRDP). CRSC is special disability compensation paid to
those with combat-related disabilities and a VA disability rating of at least 10 percent.
Servicemembers must apply for this compensation and it is not taxable. CRSC is not longevity
retired pay; it is an additional form of compensation for certain members of the armed forces.38
Thus payments are not divisible as property under USFSPA. CRDP is automatically paid to those
with any service-connected disability that is (1) rated at least 50 percent or greater by the VA, and
(2) have 20 years of qualifying military service or were retired under the Temporary Early
Retirement Act (TERA). CRDP was phased in over a period of 10 years and was fully
implemented in 2014.39
As currently structured, Congress has not defined the special pay provisions for those with
qualifying disabilities as disposable property subject to division in divorce related settlements.
During the CRDP phase-in period, some eligible retirees saw their retired pay increase. For a
retiree who is divorced and whose spouse has been awarded a percentage of the retired pay, the
former spouses may also have seen an increase in the dollar amount received. Conversely, for
those former spouses who were awarded a specific dollar amount of retired pay, changes in the
total amount received by the retiree under CRDP may not have affected the amount the former
spouse receives.
If a retired servicemember applies and is eligible for CRSC, it is possible that part or all of
disposable retired pay could be offset. This may put the former spouse in a situation where,
regardless of the percentage of the court award, there is zero disposable retired pay to be divided.
In addition, CRSC payments are retroactive to the date of filing or the enabling legislation on
(...continued)
reenter the work force. Disability pay may be his/her only source of income. It was reasoned that if this pay were
divided, and the retiree had no other source of income, the retiree could be forced onto public assistance.
35
See chapter 61, title 10 U.S. Code, entitled Retirement or Separation for Physical Disability.
36
U.S., Congress, House, Committee on Armed Services, National Defense Authorization Act for Fiscal Year 1987,
H.R. 4428, H.Rept. 99-718, 99th Cong., 2nd Sess., July 25, 1986, p. 211.
37
According to Title 10 U.S.C. Section 1021, a disabled member must either have 20 years of service or be at least
30% disabled (regardless as the number of years at service) in order to quality for disability retired pay. A member with
more than 20 years of service may receive disability retired pay if less than 30% disabled.
38
10 U.S.C. 1413a (g) states that [p]ayments under this section are not retired pay.
39
For more information on concurrent receipt, seeCRS Report R40589, Concurrent Receipt: Background and Issues
for Congress, by Kristy N. Kamarck
11
January 1, 2003, whichever is later. This means that if the former spouse had been receiving a
portion of the retired pay prior to determination of CRSC eligibility, those payments may be
recouped from him or her.
Perceptions of unfair treatment resulting from the CRDP and CRSC changes may possibly
encourage further legal consideration of already settled divorces and have led to calls for remedial
legislative action. For example, in Section 642 of the Senate version of the FY2014 NDAA (S.
1197) there was a provision that would have protected payments made to former spouses prior to
a servicemembers election of Combat Related Special Compensation (CRSC). The final version
of the FY2014 National Defense Authorization Act (P.L. 113-66) did not include this provision.
Dual Compensation: Retired Pay and Civil Service Pay

At one time, the amount of military retired pay available for division could be reduced by statutes
concerning dual compensation of retired military members employed by the federal
government as civilians.40 Dual compensation statutes provided that the retired pay of certain
retirees, depending on their status as regular or reserve officers, or when they entered federal
civilian service, was to be reduced or capped at certain limits. There were two categories of dual
compensation. The first applied only to retired regular officers (i.e., reserve officers and enlisted
personnel were not affected). Under this restriction, as of December 1, 1993 for example, retired
regular officers employed by the federal civil service were entitled to the first $9,310.17 (or
$8,700.93 for those who entered the service after August 1, 1986) of their annual retired pay, plus
50% of the remainder (the dollar figure is adjusted each year by the same formula used to
calculate cost-of-living adjustmentsCOLAsfor military retired pay).
A second dual compensation restriction applied to all retired military members who were first
employed by the federal civil service after January 11, 1979. Such retirees who were employed by
the federal civil service had their combined civil service pay and military retired pay capped so
that it was not equal to or greater than level V of the Executive Schedule. If the combined pay
exceeded this level V, military retired pay was reduced.
A former spouse who was awarded a percentage share of a retirees military retired pay would
necessarily receive a reduced amount when total retired pay was reduced because of dual
compensation restrictions. Such a reduction may have thwarted a courts intentions and, therefore,
required the former spouse to seek a court ordered adjustment of the property settlement.
In 1999, Congress repealed the above dual compensation restrictions allowing affected retirees
to receive their full military retired pay.41 The situation is noteworthy in that in some cases repeal
had an effect on benefits available to certain former spouses. Hypothetically, a divorce property
settlement that provided a fixed amount of retired pay to the former spouse would not be affected
by this repeal. Nevertheless, had the spouse been awarded a portion of retired pay (stated as a
percentage), the amount available would have increased following the repeal. Therefore, in this
latter scenario, both the retiree and former spouse would have experienced an increase in their
benefits.
40
P.L. 88-448; 78 Stat. 484, August 19, 1964, Dual Compensation Act only applies to warrant officers and
commissioned officers and is not affected by the receipt of disability retired pay. Other dual compensation laws affect
all retirees in certain situations.
41
P.L. 106-65; 113 Stat. 512 at 664, October 5, 1999.
12
Interactions with Other Federal Retirement Systems

The problems and potential inequities in dividing military retired pay in a divorce-related
property settlement are particularly complicated when the servicemember is, or becomes, entitled
to a pension under the Federal Civil Service Retirement (CSRS), Federal Employees Retirement
System (FERS), or Social Security.42 Since 1957, military service has been subject to Social
Security payroll taxes and has been counted as covered employment for all Social Security
benefits. Thus, military retirees draw benefits from two systems completely independent of each
other: military retired pay and Social Security. Most federal civilian employees hired before
January 1, 1984, by contrast, are not covered by Social Security and do not receive Social
Security based on their period of civil service employment.43 This does not preclude these federal
civilian employees from receiving Social Security benefits earned during other periods of
employment covered by Social Security.
However, various provisions of law (1) permit the crediting of active duty military service under
civilian retirement systems for the purpose of computing civil service retirement benefits, (2)
require the reduction of civil service retirement benefits when the retiree first becomes eligible for
Social Security retirement payments (generally at age 62) if no corresponding deposit to the Civil
Service Retirement and Disability Fund (CSRDF) is made for post-1956 military service, and/or
(3) permit retroactive deposit into the (CSRDF) for post-1956 military service in order to
eliminate a recomputation that can take place at age 62 for those with military service credited to
civilian retirement systems.44
A military member who, after retirement, becomes entitled to a civil service annuity can elect one
of three options pertaining to military retired pay, Social Security, and a civil service annuity.45 In
each situation, the total income received both by the military retiree and by his/her divorced
spouse from all federal retirement systems, civilian and military, could be affected by decisions
made by the retiree.
a. Receipt of both military and civil service retirement benefit, as well as Social Security
benefits based on the years of military service. This will provide the retiree with three
separate retirement benefitsmilitary retired pay, a civil service annuity, and Social Security
retirement benefit. Coverage of military service under Social Security entitles spouse and
former spouse (if the marriage lasted at least 10 years) of deceased military retirees to receive
Social Security spouse survivor benefits based on the deceased retirees military service.
b. Waiver of military retired pay and crediting of all military service to civil service
retirement, with the amount of civil service pension to be based on total federal service
(including military service), as well as receipt of Social Security benefits based on his/her
military service. Under this option, the military retiree would receive two separate benefits
civil service retirement and Social Security. However, when the retiree reaches age 62, the
years of military service can no longer be counted toward the civil service annuity (unless a
42
For an overview of the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System
(FERS), see CRS Report 98-810, Federal Employees Retirement System: Benefits and Financing. For an overview of
Social Security retirement benefits, see CRS Report R42035, Social Security Primer.
43
Instead, most civilian federal employees hired before 1984 are covered by CSRS. Most civil servants first hired on or
after January 1, 1984, however, are covered by the Federal Employees Retirement System (FERS). FERS is integrated
with Social Security; that is, FERS employees pay Social Security taxes and are fully covered by Social Security.
44
For more information on these issues from the civilian federal retirement perspective, see CRS Report R40428,
Credit for Military Service Under Civilian Federal Employee Retirement Systems.
45
Years of active duty military service may not be double-counted under the military and civilian retirement systems.
13
deposit to the CSRDF is made) because they are counted toward Social Security. In this
situation, the civil service pension is reduced at age 62 when Social Security becomes
payable. (This reduction in civil service benefits is known as Catch 62.)
c. Selection of the above option (b), and deposit of a lump sum into the CSRDF to avoid a
reduction in civil service annuity which would otherwise occur when the retiree reached age
62. Under this option, the military retiree would also receive two separate annuitiescivil
service retirement and Social Security, but the civil service pension would not be reduced at
age 62.46 Section 306 of the Omnibus Budget Reconciliation Act of 1982 (P.L. 97-253,
September 8, 1982) allows federal civilian employees who, because of their prior military
service, would face Catch 62, to avoid the reduction in their civil service annuity at age 62
by allowing them to deposit into the retirement fund an amount equal to what the retiree
would have been required to pay into the civil service pension plan had he or she been a
civilian federal employee during the time he or she actually performed military service. The
deposit must be made before the civilian employee actually retires from federal civil service.47
Catch 62 affects military retirees only if they elect to waive receipt of military retired pay in
order to credit their military service toward federal civil service retirement. Military retirees who
continue receiving separate military and civil service retirement annuities are not affected by
Catch 62 because none of their military service is credited toward civil service retirement.
Federal Civil Service Retirement and Waiver of Military Retired Pay

If a military retiree is divorced, later retires from the federal civil service, and elects to waive his
or her military retired pay and credit his or her military service toward a single civil service
pension, problems arise in the implementing a court-ordered division of military retired pay under
the USFSPA.
Prior to 1996, the waiver of military retired pay reduced the amount of such pay to zero;
therefore, no direct payments under the USFSPA could be made to the divorced spouse. Whether
or not it was the intent of the retiree to do so, he or she thereby deprived the former spouse of
retired pay awarded by a court. The federal civil service pension could then be divided,48 but
neither the retiree nor the ex-spouse would receive any military retired pay after the retiree began
to collect his or her civil service benefits. It was/is possible for the former spouse to ask the court
to reconsider the property settlement in order to provide for the division of the civil service
pension given the new circumstances. Nevertheless, that was an uncertain process.
In 1996, Congress approved language that would allow a former spouse to continue to receive
payments based on a division on military retired pay in instances wherein the retiree waived
46
Catch 62 does not affect only retired military personnel. When a retiree from the federal civil service with any
previous military service which is credited toward a civil service retirement annuityregardless of whether or not he or
she has also retired from a military careerreaches age 62 and becomes eligible for Social Security, the civil service
pension is recalculated to exclude the years of military service. In some cases, this means a substantial reduction in
civil service retirement benefits, and also in total retirement income received from federal sources (i.e., civil service
retirement plus Social Security), even with Social Security added.
47
This section can only allude to some of the extraordinary complicated situations that arise due to the interaction of
military service, civil service retirement, and Social Security. For more information, see CRS Report R40428, Credit
for Military Service Under Civilian Federal Employee Retirement Systems.
48
For more information on civilian retirement benefits for former spouses, see CRS Report RS22856, Retirement and
Survivor Annuities for Former Spouses of Federal Employees.
14
military retired pay in order to credit military service toward a single civil service pension. This
change was prospective beginning January 1, 1997.49
Persons Affected by Catch 62

The impact of the USFSPA on military retirees in the Catch 62 situation and on their former
spouses is extremely complex. The decision to make a lump-sum payment into the CSRDF so as
to avoid a reduction in civil service retirement benefits at age 62, and the liability for making the
payment, belong to the federal civilian employee alone, regardless of his or her marital status.
Retirees receive a larger annuity by making this deposit. Thus, the retiree and possibly the former
spouse can benefit when the deposit is made. If such a military retirees ex-spouses property
settlement entitles him/her to a share of the retirees civil service pension, the ex-spouse can
receive this share without incurring part of the cost of making the deposit required to avoid the
Catch 62 reduction in civil service retirement at age 62.
As noted above, prior to 1997, the former spouse whose property settlement entitles him/her only
to a share of military retirement would be deprived of all such retirement benefits. The relevance
and weight given these liabilities and benefits need to be evaluated on a case-by-case basis. Thus,
the divorced military retiree employed by the federal government as a civilian employee, and
potentially subject to the provisions of the USFSPA, faces numerous retirement-related decisions
that include the complex interactions of the different retirement systems.
Early Separations
With the end of the Cold War in 1991, the United States began to reduce the size of the armed
forces. In order to meet congressionally mandated manpower endstrength (i.e., the number of
personnel in uniform at the end of the fiscal year), DOD had been provided with a number of
options for downsizing the force, including involuntary separation pay, incentives for early
voluntary separation, and early (pre-20-year) retirement.50
These options may have affected former spouses and military members, since (1) a court may
consider or may have considered future retired pay as divisible property, although the member
may not have actually retired to receive those benefits because of the drawdown, (2) the potential
amount available under these programs may be substantially less than would have been available
under longevity retirement (retirement after a military career of 20 years or more), (3) Congress
has neither authorized nor prohibited the courts from considering these separation benefits as
divisible property, and (4) national interests (i.e., the size and composition of the military)
removed from the domain of domestic relations concerns of state courts, are at issue.
Other Issues for Congress

Since USFSPAs inception, challenges to its implementation have been dealt with by the courts
and through amendments to the law. The effects of USFSPA are borne by a large number of
military retirees and their spouses across all congressional districts; some continue to feel that
inequities in the law remain and advocate for further review, revision, or repeal of USFSPA
provisions.
49
P.L. 104-201; 110 Stat. 2580; September 23, 1996.

The authorities for some of these separation incentive programs were subsequently amended to extend the programs
through 2001.
50
15
Military Retired Pay and Civilian Pensions

Military retired and retainer pay is often compared to, and contrasted with, public or private
civilian pension programs. Those aspects of military retired pay that are comparable to civilian
pensions lead advocates of dividing retired pay in divorce cases to reason that military retired pay
should be treated similarly, i.e., as divisible property. On the other hand, certain unique aspects of
military retired pay and military service in general, have led opponents to argue that military
retired pay is qualitatively different from pensions. They maintain that to treat military retired pay
as a pension would thwart much of the programs justification.
According to the Department of Defense, the purpose of providing military nondisability retired
and retainer pay is:
To establish a nondisability retirement system and authorize the payment of retired pay
for service in the armed forces of the United States in order to ensure that (1) the choice
of career service in the armed forces is competitive with reasonably available
alternatives, (2) promotion opportunities are kept open for young and able members, (3)
some measure of economic security is made available to members after retirement from
career military service, and (4) a pool of experienced personnel subject to recall to active
duty during time of war or national emergency exists. 51
The first and third purposes are directly comparable to reasons given for providing civilian
pensions. The second purpose is different, in terms of the age at which military members retire.
Most military members become eligible to retire between the ages of 39 and 45, while civilian
pensions usually require that the beneficiary be much older before benefits become available. All
of these provisions are designed to allow the military to keep the force young and vigorous, by
permitting the involuntarily retirement of its members at a relatively young age.
The fourth purpose provides the principal argument for differentiating military retirement benefits
from civilian pensions. In retirement, military retirees continue to be members of the uniformed
services and, to an extent, their retired pay serves as compensation for reduced service. Military
retirees are generally subject to involuntary recall to active duty as well as to employment and travel restrictions.52 They also remain subject to the Uniform Code of Military Justice. Violating
any of these restrictions may be sufficient cause to terminate retired pay.
Under most civilian pension plans, retirement benefits are viewed as deferred compensation. In
other words, pension annuities are based on benefits earned during the period of employment,
rather than during retirement. Since these pensions may also be earned during the period of
marriage, pensions are viewed as property that is subject to division in divorce settlements.
Recent Changes to the Military Retirement System

Currently, qualified military members receive a defined pension from the time of retirement until
death. Servicemembers may also make contributions to individual retirement accounts through
the Thrift Savings Plan (TSP) or through other private retirement accounts.53 Recent changes to
51
Department of Defense, Office of the Secretary of Defense. Military Compensation Background Papers, 7th Edition,
September 1996, p. 577.
52
10 U.S.C. 688 provides the authority to recall retired members to active duty.
53
The TSP is a defined contribution retirement plan similar to the 401(k) plans provided by many employers in the
private sector. The income that a retired worker receives from the TSP will depend on the balance in his or her account.
For more information see CRS Report RL30387, Federal Employees Retirement System: The Role of the Thrift
Savings Plan, by Katelin P. Isaacs.
16
the military retirement system that will go into effect on January 1, 2018, authorize government
matching contributions to the TSP up to a certain percentage of basic pay.54 In addition, for those
entering the service on or after January 1, 2018, their defined annuity will be calculated at a
reduced multiplier.55 The reduction in the multiplier for the defined annuity does not change the
USFSPA provision allowing the court to award up to 50% of retired pay to a former spouse.
Servicemembers under this new blended system will still receive a defined benefit once eligible
for retired pay, and will be vested in government contributions to their TSP accounts after two
complete years of service. Vesting for the defined benefit remains 20 years of eligible service for
a regular retirement.
Funds in a TSP retirement account may be divided in a divorce settlement and federal statute does
not limit the percentage that can be awarded to a former spouse in the division of these assets.
TSP funds are typically divided based on the amount in the account at the time of separation or
divorce. The TSP will honor a court order that requires payment in the future only if the present
value of the payees entitlement can be calculated to be paid currently.56 When the new blended
retirement system goes into effect on January 1, 2018, active duty servicemembers with less than
12 years of service and National Guardsmen and Reservists with less than 4,320 points may
choose to opt in. This may affect servicemembers and spouses who have finalized divorce
settlements prior to January 1, 2018. For example, a servicemember who has 11 years of service
and whose former spouse was awarded 50% of his retired pay could opt into the new system. This
would reduce the potential monetary value of his/her defined annuity and potentially reduce the
amount received by a former spouse.
Those servicemembers who opt into the new blended retirement system or enter service on or
after January 1, 2018, will also be eligible to receive a minimum amount of continuation pay
between 8 to 12 years of service. This could be paid to the member in a lump sum or in four
installments. This payment could be considered to be divisible upon the dissolution of a
marriage.57
Another consideration is a provision in the new law that would allow servicemembers to opt for a
lump sum payment of retired pay at the time of retirement vice a monthly annuity. It is yet
unclear whether a court order in a divorce settlement could require the servicemember to select
either the lump sum payment or the monthly annuity for the purposes of division with a former
spouse.
As this new retirement system is implemented, Congress might consider whether the contributory
portion of military retirement (TSP individual and matching contributions) should be treated
differently under USFSPA than the noncontributory, defined annuity.
54
For more information see CRS Report RL34751, Military Retirement: Background and Recent Developments, by
Kristy N. Kamarck.
55
Currently the multiplier is 2.5% for each year of service; the reduced multiplier is 2.0%. The formula for calculating
military retired pay is the number of years of service times the multiplier times the average of the highest three years of
salary.
56
See https://www.tsp.gov/PDF/formspubs/tspbk11.pdf.
57
Sullivan, Col. (Ret.) Mark E., SILENT PARTNER: The Blended Retirement System and Divorce, American Bar
Association, Family Law Section, Raleigh, NC, 2016, http://www.americanbar.org/content/dam/aba/administrative/
family_law/committees/blendretsystem.authcheckdam.pdf.
17
Pay Grade at Retirement v. Pay Grade at Divorce

Because regular military retired pay is currently not vested until 20 years of service, it is
calculated based on an individuals pay grade and years of service at the time of retirement. In
some divorce cases prior to 2017, divisible retired pay was calculated based on years of service at
the servicemembers retirement, even if the divorce occurred many years prior to the retirement.
Some were concerned that the division of the retired pay at the time of retirement and not at the
time of divorce created an inequity for the servicemember and subsequent spouses. This issue
was raised by DOD and others in the initial consideration of the USFSPA. As stated by Dr.
Lawrence J. Korb, then-Assistant Secretary of Defense for Manpower, Reserve Affairs, and
Logistics with regard to the proposed bill,
I believe the provisions in the first section in this bill to divert up to 50 percent of a
servicemembers disposable retired pay would be inequitable unless the 50 percent limit
is computed as if the member could retire at the time of the final court order. Pay
increases for promotions and longevity from the data of divorce to the date of retirement
would substantially increase a servicemans retired pay. If subsequent raises could be
included, they would constitute windfall benefit for the former spouse to which he or she
had made no contribution.58
The National Defense Authorization Act for FY2017, signed by President Obama on December
23, 2016, included a provision (Sec. 641) that requires divisible retired pay to be calculated based
on the amount of basic pay payable to the member for the members pay grade and years of
service at the time of the court order instead of at the time of retirement.
Some have argued that this revision to USFSPA will add unnecessary complexity to legal
processes in many states that already have a rule or rules in place to allow for equitable
discounting of a former spouses military pension benefit.59 Others argue that the frozen accrued
benefit method is the most equitable approach and should continue to be a federal statutory
requirement.
Remarriage of a Former Spouse

Some benefits to former spouses, such as commissary privileges and medical care, terminate after
the remarriage of a former spouse. However, pension payments to the former spouse continue
after remarriage until the retired servicemembers death. Some military retiree advocacy groups
argue that the absence of a remarriage clause is inconsistent with the treatment of other federal
retiree and benefit programs.60 In addition there is the possibility for multiple payments to a
58
S.Rept. 97-502.
At least six states had already been using the frozen accrued benefit or date of divorce method for pension
valuation which fixes the retirement benefit at the time of separation or divorce. In addition, a majority of states used
the time rule or date of retirement method for valuing and dividing a defined benefit plan in divorce cases which
took into account the longevity of the marriage during the members service and gives the servicemember credit for
subsequent service time and promotions. For more information on methods for calculating the marital share of a
military pension, see Sullivan, Mark, E., Military Divorce Handbook: A Practical Guide to Representing Military
Personnel and Their Families, 2nd ed. (American Bar Association, 2011), p. 536. For more information on how the
time rule is applied, see Moss, Anne E., Your Pension Rights at Divorce: What Women Need to Know, 3rd ed.
(Pension Rights Center, 2006), pp. 20-25.
http://www.pensionrights.org/pubs/books/divorcebook/YourPensionRightsAtDivorce%20Part%202%20State%20Divorce%20Law%20and%20Your%20Pension%20Rights.pdf.
60
For example under the Social Security system, benefits of a former spouse terminate after remarriage of the former
spouse.
59
18
single individual. For example, a former spouse could be awarded 50% of a servicemembers
retired pay and then remarry and subsequently divorce a second military spouse with an
additional award of 50% of the second servicemembers retired pay. Previous congresses have
proposed changes to USFSPA that would terminate payments upon remarriage of a former
spouse. These amendments have not been enacted.
Working Spouses and Dual-Service Couples

In deliberations leading up to the enactment of the USFSPA, the Senate Armed Services
Committee stated:
Military spouses are still expected to fulfill an important role in the social life and welfare
of the military community. Child care and management of the family household are many
times solely the spouses responsibility. 61
Nevertheless, since 1982 the nature of military families and family life has changed. Female
representation in the armed forces has increased from 11% to 18%62, same-sex spouses are
allowed to receive benefits63, and the number of dual-service married couples has more than
doubled since 1985. Dual-service marriages currently account for 11.7% of all active duty
marriages.64 Over half of married females in the Marine Corps (57.5%) and Air Force (55.1%) are
married to other military members. Approximately 7.5% (49,883) of active duty members
spouses are male.65
Frequent moves, deployments, and other hardships continue to create challenges for civilian
spouses of military members. In general, female military spouses are employed at lower rates and
earn less than their female counterparts married to civilians. A 2014 survey66 found that 43% of
military spouses were employed outside of the home relative to approximately 48% of marriedcouple families across all U.S. households.67
Nevertheless, some civilian spouses of military members may have equivalent or greater earning
potential in their careers. These civilian and dual military spouses may not be contributing to
management of the family household in the same way as perceived in 1982. For example,
consider a case of a dual military active duty couple who are married while in the service.
Assume that one former spouse leaves the service at eight years and goes to school for a graduate
degree while being financially supported by his or her military spouse. After 10 years of
marriage, the couple divorces. One spouse goes on to have a civilian career while the other
61
S.Rept. 97-502.
Center for Naval Analysis, Population Representation in the Military Services, 2014, at https://www.cna.org/poprep/2014/contents/contents.html.
63
On December 22, 2010, gay servicemembers were authorized to serve openly; however same-sex partners were
ineligible for certain federal benefits under the Defense of Marriage Act (DOMA). Following the June 26, 2013
Supreme Court decision on United States v. Windsor holding sections of DOMA unconstitutional , DOD issued a new
policy extending all military benefits for married couples to same-sex couples. For more information see CRS Report
R44321, Diversity, Inclusion, and Equal Opportunity in the Armed Services: Background and Issues for Congress, by
Kristy N. Kamarck.
64
Department of Defense, 2014 Demographics: Profile of the Military Community, 2014, p. 46.
65
Ibid., p. 132.
66
Blue Star Families, 2014 Military Family Lifestyle Survey Comprehensive Report, Washington, DC.
67
Bureau of Labor Statistics, Table 2. Families by presence and relationship of employed members and family type,
2014-2015 annual averages.
62
19
spouse continues a military career until 25 years of service when he or she retires and begins to
receive his or her retired pay.
Under current law68, the spouse who left the military at eight years would not be vested in any
military retired pay; however, under USFSPA he or she is entitled to be awarded up to 50% of the
former spouses military retired pay. The (now-civilian) former spouse may also keep his or her
entire civilian pension, as it was not an available asset to be divided at the time of the divorce. In
such a situation, it would be hard to argue (as it was for justification of the USFPA), that one or
the other had the primary responsibility for child care and household management during those
eight years when both were married and in the service.
The intent of the USFSPA remains equitable treatment by the courts of benefits earned through
military service or affiliation. In the past, fundamental definitions and inconsistent application or
interpretation of the law has mitigated against this intent. In addition, new laws that affect
military benefits but are not directly related to the USFSPA may have unintended effects on
equitable division of already settled or future divorce cases.
Author Contact Information

Kristy N. Kamarck
Analyst in Military Manpower
kkamarck@crs.loc.gov, 7-7783
Acknowledgments
This report updates previous CRS research and reports authored by David F. Burrelli.
68
For those entering the service before January 1, 2018.
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